Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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For the year ended December 31, 2022, Settles Incorporated earned an ROI of 8.8 %. Sales for the year were $9 million, and average
asset turnover was 2.2. Average stockholders' equity was $2.9 million.
Required:
a. Calculate Settles Incorporated's margin and net income.
Note: Round "Margin" answer to 1 decimal place. Enter the net income answer in dollars, i.e., $5 million should be entered as
5,000,000.
b. Calculate Settles Incorporated's return on equity.
Note: Round your answer to 1 decimal place.
a. Margin
a. Net income
%
b. Return on equity
%
Joel de Paris, Inc.
Balance Sheet
Beginning
Balance
$
Ending
Balance.
Assets
Cash
135,000 $ 140,000
Accounts receivable
Inventory
338,000.
476,000
579,000
483,000
Plant and equipment, net
868,000
861,000
Investment in Buisson, S.A.
Land (undeveloped)
408,000
426,000
254,000
249,000
Total assets
$2,582,000
$ 2,635,000
Liabilities and Stockholders' Equity
Accounts payable
Long-term debt
$ 370,000
$ 340,000
Stockholders' equity
960,000
1,252,000
960,000
1,335,000
Total liabilities and stockholders' equity
$ 2,582,000
$ 2,635,000
A
Joel de Paris, Inc.
Income Statement
Sales
$4,074,000
3,503,640
570,360
Operating expenses
Net operating income
Interest and taxes:
Interest expense
$ 126,000
203,000
Tax expense
329,000
Net income
$ 241,360
The company paid dividends of $158,360 last year. The "Investment in Buisson, S.A.," on the balance sheet represents an investment
in the stock of another company. The company's minimum required rate of return of 15%.
For the year ended December 31, 2022, Settles Incorporated earned an ROI of 10.5%. Sales for the year were $9 million, and average asset turnover was 2.1. Average stockholders' equity was $2.8 million.
Required:
Calculate Settles Incorporated's margin and net income.
Note: Round "Margin" answer to 1 decimal place. Enter the net income answer in dollars, i.e., $5 million should be entered as 5,000,000.
Calculate Settles Incorporated's return on equity.
Note: Round your answer to 1 decimal place.
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